On July 1, 2010, a variety of sweeping changes to Connecticut’s Common Interest Ownership Act will take effect, and associations throughout the state will need to change the way they approach building management. “It’s the biggest change to Connecticut condo law in 25 years,” says attorney Adam J. Cohen, the chairman of community law with Pullman & Comley in Bridgeport.
So pronounced are the changes, in fact, that the law built in a waiting period of almost a year, to give associations, lawyers, and property managers time to get up to speed on the requirements. The law passed in July 2009, but most of its changes were delayed until this July.
CIOA – pronounced “KAI-oh-wah,” like Iowa with a K – began life as a nationally-developed standard that states could adapt for their own use. The Uniform Common Interest Ownership Act was “a model act that was developed nationally to be a guide to states,” explains Lisa J. Anderson, a partner with Bender, Anderson & Barba in Hamden. “Property law is, in this country, very localized to the states,” she says. “There’s wide variety.” The federal template was intended to createa national standard with respect to condo law.
States were not required to adopt CIOA; most did not. But the state of Connecticut put its own version on the books that became effective on January 1, 1984. This caused – and continues to cause – some confusion, as most of the old CIOA law only applied to condo associations formed after that date; even older condos were also subject to an earlier piece of legislation, the Condo Act of 1976.
“You could have two condos right next door to one another,” says Cohen. “One follows one set of laws, the otherfollows another.”
Many of the new CIOA law changes are targeted for pre-1984 condos, whileothers apply to post-1984 condos or all condominiums, regardless of their founding date.
The new law was the product of years of work, lobbying, and study, and was born of suggestions by “a blue ribbon panel of lawyers, condo managers, insurance industry” and others, Cohen says. The intent of the law is simple: modernize the way associations go about their business.
Provision in Effect Now
Two significant provisions of the law are already in effect for pre-1984 condos. One removes a roadblock to making amendments to bylaws. Previously, the consent of banks and other holders of unit owner mortgages was required for approval of any bylawor declaration changes. But many of mortgage holders were unresponsive when asked for their consent. Under the new law, unless mortgage holders object to any changes within 45 days of being notified, they are considered to have approved them.
The second change, already in effect, allows condos to use future income – which is to say, the promise of monthly assessment fees – as collateral on bank loans. These changes have recently given pre-’84 associations much neededflexibility in operations that post-’84 condominiums have already enjoyed – especially crucial in the current economy.
“It allows pre-’84 condos to borrow money more easily and to change the operating documents more easily,” says Anderson.
The other provisions – and there are many – take effect in July. Among the highlights:
“It will dramatically expand recordkeeping,” Cohen says, requiring both pre- and post-’84 associations keep more paperwork for longer periods of time. Ballots and proxy votes, for example, need to be filed for one year.
There will be “a lot more open meetings where unit owners can participate,” Anderson says.
Expenditures, receipts, budgets, reserve funds, assessment delinquencies, collection actions, three years’ worth of financial statements and tax returns; detailed contact information of all unit owners, board members, and directors; all governing documents; and records of minutes and votes at all board, committee, and owner meetings – all of these documents must be kept on file and available for inspection by unit owners, Cohen says.
This will mean, among other things, more work for board members, who already draw a salary of exactly nothing. Expect some grumbling along those lines.
New CIOA rules, for both pre and post-‘84 condos, curtail the ability of the board to do things like decide on the spur of the moment to have a meeting, convene in someone’s apartment, and decide to, say, fire the property manager, and only announce the action after the fact. The rules call for 10 days’ advance notice of board meetings along with the provision of meeting agendas and copies of additional materials that the board will be using at their meetings.
“Associations are going to be required to have greater transparency in their operations,” says Kim McClain, executive director of the Connecticut chapter of the Community AssociationsInstitute.
This heralds “a shift from boards having the right to make decisions without unit owner participation in the process,” says Anderson, as well as representing “a huge potential culturalshift, especially for small associations that are run by volunteers and not property managers.”
Boards who are not used to liaising with unit owners will now be placed in the uncomfortable position of having todefend their actions. And it’s virtually impossible to win over everyone in a community, especially a big one, no matter how charismatic the board president, or how good the idea.
“People will have to agree to disagreeand move on,” she says. “It will be a challenge to board members.”
Change is always difficult; for someone who has been the president of the board for twenty years, this could really rock the proverbial boat. This is why the legislators built in the one-year ramp-up period.
More Information on Re-sale Certificates
“Every condo in Connecticut will have to alter their resale certificate,” Cohen says, owing to a host of provisions and information the law dictates must be included in said documents, like the number of foreclosures in the past year, along with pending foreclosures.
Also changed in the law are maximum charges for the certificates – fromactual photocopying costs (capped at $125) to a $125 flat-fee plus photocopying expenses.
Again, these changes, for both pre- and post-‘84 condos, are intended to modernize the process and, ultimately, to help the boards conduct business. But they may not feel that way come July.
Boards tend to be more collegial and less corporate in their approach. “They tend to be informal, run by volunteers who change frequently,” Anderson says. This, too, will change, as CIOA also mandates that Robert’s Rules of Order be used at all meetings for all community associations, both pre- and post-‘84 condominiums. Robert’s Rules are a set of parliamentary procedures that have traditionally beenused in New England town meetings for centuries. They serve to formalize the way that meetings operate (see sidebar).
Four people – or three, or sometimes even two – in a room using Robert’s Rules of Order may seem downright silly. Anderson, for one, doesn’t like this particular provision.
“I disagree strenuously with this,” she says. “The presumption is that it’s appropriate. I’ve felt it’s not an appropriate way of conducting meetings in smaller buildings. It creates uncertaintiesabout process and stifles generative thinking.”
In other words, people are so worriedabout mucking up Robert’s Rules that they pay more attention to that than the financial problems the association might be facing.
“The dynamics of decision-making are going to change.”
But some Connecticut community associations are choosing to “opt-out” of the Robert’s Rule requirement using a provision in the new law. The provision allows them to opt-out in two different ways: they can amend their by-laws to allow Robert’s Rules to be set aside, or two-thirds of ownersat a meeting can vote to suspend the mandate for that meeting.
CIOA legitimizes e-mail as a form ofcommunication for post-‘84 communities. If “notification” is required in the by-laws, said notification can be done electronically.
This, too, represents a huge shift in how boards and property managers operate. In her experience, Anderson says, property managers don’t use e-mail. Now they can, as it makes more business sense for them to do so.
CIOA also represents a shift in big-picture legal thinking. Traditionally, condos were regarded as businesses. That thinking, too, is changing.
Associations are “treated as mini-governments,” Anderson says, and the CIOA changes denote “a shift away from private entities to more like quasi-governmental entities.”
What should an association do to prepare for July? Community associations can consult their attorney for anyprovisions that would affect them.
The Connecticut Chapter of Community Associations Institute also has taken an aggressive role in educating members. Its website – caict.org – teems with CIOA information, including a detailed piece by Cohen.
Like it or not, board members have a responsibility to educate themselves about the changes, so that they can leadtheir associations beyond July, 2010.
“There haven’t been changes to this degree in 25 years,” says McClain. “This is major. It won’t affect all associations in the same way, but all will be affected in some way, shape, or form.”
Greg Olear is a freelance writer and a frequent contributor to New England Condominium magazine. Managing editor Jim Douglass contributed to this report.